Slobbiest

Monday, July 11, 2005

The sheer scope of greed, corruption, dishonesty and outrageous hubris being revealed in a Senate Indian Affairs Committee investigation of possible fraud by lobbyist Jack Abramoff almost defies belief.

Abramoff is at the center of the hearings, along with Michael Scanlon, a public relations executive and former spokesman for House Majority Leader Tom DeLay, R-Texas. The committee is investigating whether Abramoff misled the Mississippi Band of Choctaw Indians about his work on their behalf, mainly concerning casino gambling.

Abramoff is accused of receiving about $80 million from several tribes over four years while misrepresenting his work to tribal leaders and failing to deliver on much of it. All the while, he accompanies lawmakers — including DeLay — on overseas trips now under scrutiny as investigators try to establish how the trips were paid for and whether Native tribes were defrauded.

Senate investigators from the committee, chaired by Sen. John McCain, R-Ariz., recently released documents indicating Abramoff used money from a Mississippi tribal client to set up bogus Christian anti-gambling groups and to fund pet projects.

The high-rolling Republican lobbyist, who is also the subject of a corruption investigation by the Justice Department, laundered tribal money, and, along with Scanlon, set up bogus Christian phone banks to whip up opposition to casinos proposed by rival Native tribes, according to documents released by the committee.

That ploy dragged former Christian Coalition Executive Director Ralph Reed into the picture. Reed acknowledges receiving $4 million from Abramoff and Scanlon but says he didn't know where the funds were coming from.

Abramoff and his lobbying team discussed how they would "pump up" their bills and expense accounts to the Choctaws by tens of thousands of dollars a month, the documents said.

Tellingly, three former associates of Abramoff and Scanlon declined to testify, citing their Fifth Amendment right against self-incrimination. Among the more odious of the revelations was the so-called "gimme five" gambit described in the hearings.

According to the Washington Post, whenever Scanlon pitched his services to a client, Abramoff would remind him of their extra profits. Abramoff once wrote to Scanlon, "Don't forget the ‘Gimme five' aspects."

According to committee member Sen. Byron L. Dorgan, D-N.D., "‘Gimme five" means ‘I'll take a cut of this.'"

There are many lessons to be learned from an adventure in dishonesty of this size — including, we trust, severe punishment for the perpetrators of this latest outrage.

Native tribes succumbing to the easy-money allure of casino revenue should gain from the adage relearned by the Choctaw tribe in their foray into the sty of legalized gambling. You lie with pigs, you're gonna get dirty.

As the Choctaws of Mississippi have learned, there's a good reason for keeping close scrutiny on gambling operations figures. It's the same reason pigs are kept penned up. Greed.

Congress is returning to Washington this week. Do you know where your members spent their just-concluded recess? Or what special interests might have picked up the tab?As USA TODAY's Jim Drinkard reported recently, devious lobbyists and travel-hungry lawmakers are using innocent-sounding non-profit corporations to get around the rules on junkets.

One such shadowy, tax-exempt non-profit run by a group of lobbyists — America's Trust — was used in April to fly four members of Congress and three of their spouses to California's scenic Napa Valley for three days at a $658-a-night resort. At least five lobbyists went along.

If the lobbyists had paid for the $46,000 trip directly, they would have violated a ban designed to prevent members of Congress from taking gifts from special interests. By running the trip through America's Trust, it was legal — if sleazy.

The Center for Public Integrity, a watchdog group, and American Public Media, a public broadcaster, reported last month that more than 850 congressional trips, worth more than $4 million, were paid for since 2000 by non-profits with lobbyists among their directors. Among the popular fact-finding destinations were Las Vegas, Miami, Scottsdale, Ariz., and Boca Raton, Fla., at home — and Paris, London, Rome, Rio de Janeiro and the Cayman Islands abroad.

The real sources of the money that paid for this congressional travel are cloaked in secrecy. Non-profits don't have to report where their money comes from, and most aren't about to.

The creative use of non-profits to disguise Washington shenanigans was highlighted further at a recent Senate hearing into allegations that high-rolling lobbyists bilked Indian tribes. David Grosh, now a construction worker, told senators of being a lifeguard on the Delaware shore in 2001 when a childhood friend, who became a power lobbyist, asked him to head a think tank called the American International Center, based at his beach house.

The center has since been exposed as part of a network of non-profits linked to the schemes of lobbyist Jack Abramoff.

Senators and representatives are entitled to travel at taxpayer expense to broaden their perspectives on major issues. They're not entitled to mini-vacations financed by special interests.

Congress needs to tighten its rules on members' travel to close the lobbyist/non-profit loophole. And non-profits being used as fronts for lobbyists should be required to disclose where their money is coming from and where it's going. High-flying lawmakers and lobbyists who exploit tax-exempt entities ought to be grounded.

July 11 (Bloomberg) -- The U.S. Senate investigation of lobbyist Jack Abramoff is raising the curtain on a multibillion- dollar world of tax-exempt groups poised to become the next refuge of fundraisers trying to stay a step ahead of regulators.

The groups, called 501c4s for the section of the tax code under which they fall, were among the vehicles that Abramoff used to move money around on behalf of clients, according to e-mails released by the Senate last month.

While 501c4s are prohibited from spending more than half their resources on political activity, their combined budgets of $52 billion dwarf the major parties. Election lawyers say a congressional attempt to rein in other groups, such as the Swift Boat Veterans for Truth, which were prominent in last year's presidential campaign, may end up driving more money into the 501c4s, whose ranks include such well-known groups as AARP, the nation's biggest senior-citizens' organization, and the National Rifle Association,.

``Money in politics is like air in a balloon: Any time you compress it one place it's going to pop out somewhere else,'' says Kenneth Gross, who was the Federal Election Commission's head of enforcement in the 1980s. The 501c4s are ``a logical place for it to come out.''

Senators John McCain, an Arizona Republican, and Russell Feingold, a Wisconsin Democrat, are trying to limit what they say are excesses by political organizations known as 527 groups, named for a different section of the tax code. These include the Swift Boat Veterans, which ran advertisements against Democratic presidential candidate John Kerry in 2004, and America Coming Together, a group that went after President George W. Bush.

$5,000 Limit

Unlike the 501c4 groups, the 527s must disclose their major contributions and how they spend the money, all of which they can use for political activity. Both groups can take in unlimited funds, although legislation sponsored by McCain and Feingold would change that for the 527s. The measure would limit donors to contributions of $5,000 a year. A House panel approved a companion measure on June 29.

Some 527s have already morphed into 501c4 organizations. They include Washington-based Progress for America, which raised $45 million last year to run ads supporting Bush and criticizing Kerry. This year, the group has an $18 million campaign ready to support Bush appointments to the Supreme Court, including the replacement for Justice Sandra Day O'Connor, who announced her retirement July 1.

Household Names

Many of the more than 107,000 501c4 organizations registered with the Internal Revenue Service are household names. The biggest is Washington-based AARP, with a budget of $626 million in 2003. Next is the Fairfax, Virginia-based National Rifle Association, with $233 million, followed by the Sierra Club, a San Francisco- based environmental group, with $95 million. Chartered to ``further the common good,'' the groups lobby on a range of issues and have millions of small donors.

``They're a potent force in American politics,'' says Gross, now a partner at the Washington office of Skadden Arps Slate Meagher & Flom LLP.

Lobbyist Abramoff -- whose partner, Michael Scanlon, was formerly a top aide to House Majority Leader Tom DeLay -- used one 501c4 group to funnel money from his Indian tribe clients to projects run by political operatives, according to e-mails released June 22 by the Senate Indian Affairs Committee. The tribe paid at least $1 million to Washington-based Americans for Tax Reform, founded by tax-cut advocate Grover Norquist, which passed out checks to a coalition trying to block casino gambling.

A smaller subset of the 501c4 groups is more focused on electoral politics. Without a requirement to detail their expenses, it's almost impossible to know how much political activity they engage in, experts in campaign finance say.

`Unaccountable'

The groups took in a total of $52.1 billion in the most recent year in which they filed, according to IRS records compiled by PoliticalMoneyLine, a Washington-based company that tracks campaign finance. Only part of that went toward politics, yet it potentially outstripped the $2.9 billion raised for federal elections last year.

``There's no accountability,'' says Kent Cooper, a co-founder of PoliticalMoneyLine. ``You wind up with an unregulated, unaccountable organization moving millions of dollars into the corners of the political arena.''

Colorado Springs, Colorado-based Focus on the Family, an evangelical Christian organization, used its 501c4 arm to support Republican Senate candidates such as John Thune of South Dakota in his successful bid last year to unseat Democratic Leader Tom Daschle. It formed a 501c4, Focus on the Family Action, before the election, spokesman John Wilson says. IRS records show the group has a budget of $13.4 million.

Lots of Leeway

Washington-based Citizens United last year ran ads in Florida and Ohio. The group also produced a movie, ``Celsius 41.11,'' in response to director Michael Moore's anti-Bush ``Fahrenheit 911.''

Next year, the group plans to work against New York Democratic Senator Hillary Clinton's re-election.

``A 501c4 can do lots of things related to an election,'' Citizens United President David Bossie says.

Whether a group crosses the 50 percent limit for political activity ``is difficult to determine at the margins,'' says Marcus Owens, a lawyer at Caplin & Drysdale in Washington who headed the IRS tax-exempt organizations unit from 1990 to 2000.

Searching for C4s

McCain's Indian Affairs committee began investigating Abramoff to explore his handling of millions of dollars in tribal money. Some of the e-mails the committee released showed Abramoff and Christian activist Ralph Reed discussing how to move funds for a project to kill an Alabama gambling initiative. Abramoff's client, the Mississippi Band of Choctaw Indians, owned a casino that might suffer from competition.

``Please give me the name of the c4 you want to use,'' Abramoff wrote in January 2000 to Reed, who's running for lieutenant governor of Georgia.

They settled on Americans for Tax Reform, the e-mails showed. The Choctaws sent money to Norquist's group, and it wrote checks to Reed's anti-gambling coalition.

Abramoff's use of tax-exempt groups has drawn the attention of senators such as Byron Dorgan, a North Dakota Democrat.

``If you dyed that money purple, there would be a lot of purple pants pockets around this town and in the country,'' Dorgan said at the Indian Affairs Committee hearing. ``This is probably not the only circumstance where that happens.''

Long History

Americans for Tax Reform spokesman Chris Butler defended the contributions from the Choctaws. ``Native Americans have just as much right as anyone else to participate in American politics and donate money to any group they want,'' he says.

The contribution to Norquist's group ``was entirely appropriate and was not an attempt to disguise the funds,'' says Lisa Baron, a spokeswoman for Reed. ``Using intermediaries is common.'' Abramoff spokesman Andrew Blum had no comment.

Opponents of the 2002 McCain-Feingold law that cut off unlimited donations to the political parties say the growth of groups such as 501c4s is the natural consequence of trying to put limits on campaign finance.

``To think that you're going to keep money away from politics is folly,'' says Representative John Boehner, an Ohio Republican. ``We lock down what you can give to the parties and we create this whole new industry on the outside.''

To contact the reporters on this story:Mike Forsythe in Washington mforsythe@bloomberg.netKristin Jensen in Washington kjensen@Bloomberg.net

Democrats have released a series of new political ads highlighting a new issue that Democrats see as a winner -- accusing House Republicans of ethical lapses. The Democratic Congressional Campaign Committee (DCCC) and the Campaign for America's Future are running print and radio ads accusing several Republicans -- including Majority Leader Tom DeLay -- of running afoul of House ethics rules regarding travel paid for by outside organizations, as well as other charges. The new ads come as Minority Leader Nancy Pelosi, California Democrat, filed with the House clerk three new corrections on her own travel disclosure forms. A target of the newspaper ads placed by the DCCC is Mr. DeLay of Texas, who is accused of accepting travel paid for by casino lobbyist Jack Abramoff. Those newspaper ads target five other Republicans across the country including Rep. Randy "Duke" Cunningham, whose California home and the boat in which he lives while in Washington were raided by federal agents this month. The raid was part of a criminal investigation into his relationship with a defense contractor. A radio ad produced by the liberal Campaign for America's Future, meanwhile, is running in the Ohio district of Rep. Bob Ney, a Republican who also has ties to Mr. Abramoff. "Texas casinos, Florida cruise ships and Washington lobbyists," says the 60-second ad, which urges people to call Mr. Ney. "What about Ohio families? Too many of us are looking for good-paying jobs, stuck with skyrocketing health care bills and rising prices at the gas pump." Mr. Ney and Mr. DeLay both have said they have done nothing wrong and welcome the opportunity to clear their names publicly and officially. The House ethics committee, which could clear or punish House members, has had difficulty organizing itself because of partisan disputes over rules, membership and staffing. The ads are part of a larger effort by Democrats to portray the entire Republican majority in the House as corrupt -- a tactic similar to the one of the strategies used by Republicans in the historic 1994 takeover of Congress. "Too many Republicans in Washington, D.C., have fought for too long for their special-interests contributors and their ethically challenged Republican leadership over the hard-working middle-class families they were elected to represent," DCCC executive director John Lapp said. "As Americans decide what kind of representation they want in Washington, D.C., the ethical misconduct and the misplaced priorities of the Republican leadership is becoming an issue." But top Democrats are taking some fire of their own. Mrs. Pelosi filed three delinquent disclosure forms for three trips she took more than five years ago. A December 1999 trip she took to Taipei, Taiwan, cost $8,040 and was paid for by the Chinese National Association of Industry and Commerce. She also filed delinquent reports for a February 1998 trip to New York to appear on "Meet the Press" and a November 1999 trip to deliver a speech in Florida. NBC paid the $200 cost of the New York journey, according to the report, and the American Israel Public Affairs Committee picked up the $340 tab for the Florida trip.

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